Utah lawmaker hopes to fund public preschool with private dollars

Legislature • State senator will pitch program for at-risk kids; Utah would pay back investors.

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This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Early childhood education advocates recognize it could be tough to get Utah lawmakers to agree to pay for a proposed preschool program for at risk-students, given limited dollars and historical resistance to state-funded preschool.

That's why they're taking a different tack this year: Get private investors to pay for the program, with the promise that the state will eventually pay them back if it succeeds in improving education.

It's a proposal Sen. Aaron Osmond, R-South Jordan, plans to make to fellow lawmakers in the upcoming legislative session. His ultimate goal, he said, is to expand and beef up preschool programs for at-risk tots in Utah to improve education and save the state money.

He said earlier help for some kids could, in the long run, reduce the amount of money the state spends on special education. Osmond said a number of students now wind up in special education because they started school behind their peers and never caught up  not because they're developmentally delayed.

"If we really do invest in early education following very specific steps and criteria," Osmond said, "then we will see the results."

Janis Dubno, a senior policy analyst with Voices for Utah Children, which has been working with Osmond on the idea, said research supports the concept. United Way of Salt Lake has also been working on the proposal.

Dubno said the Granite School District saved $1.7 million on special education over five years through its high-quality preschool program. She said upon entering Granite's preschool in recent years, 238 students scored low enough on standardized tests to be possibly headed toward special education. But over five years, only 11 of those students actually ended up in special ed.

"You can have a real big impact on that child's life trajectory if you can invest in high quality education before the age of 5," Dubno said.

Dubno, who is also a former investment banker, said Osmond's funding model solves the problem of where to get the cash.

"I think what you find is a lot of support for high-quality preschool in the education community, but they have immediate needs as well," Dubno said. "The state can take comfort that only high-quality programs will be invested in, and they don't bear the risk of performance."

Osmond is proposing that private investors put up $10 million to expand and improve preschool programs for at-risk kids, allowing four or five times the number of students to participate. Meanwhile, the state would set aside into a fund $1 million or $2 million a year for five to seven years. If at the end of that time, the program proved successful, hitting certain performance targets, the state would use that fund to pay the investors back their $10 million plus interest. If the program flopped, the state would keep its money.

Already, potential investors, such as Goldman Sachs, have expressed interest.

Goldman Sachs participated in a somewhat similar funding model in New York City last year, agreeing to invest nearly $10 million in a program to reduce recidivism among teenage offenders. In that deal, Goldman Sachs will recoup the full amount if recidivism drops by 10 percent. Or, it could get more back if recidivism drops further.

Alicia Glen, managing director of Goldman Sachs Urban Investment Group, said it's too early to say exactly how much Goldman might be willing to invest in the Utah preschool program or what the performance targets might be. But she said Goldman Sachs is potentially interested because of data that show the effectiveness of quality preschool in improving children's lives.

She said such funding models are opportunities for Goldman to both make wise investments and differences in people lives.

"We don't do this from a philanthropic perspective, this is a business," Glen said, "but it's a business looking at two types of returns, fair financial returns and how we can measure changing people's lives and improving neighborhoods."

Plus, Dubno said even if the state does wind up paying the investors back, the state could still save money overall from lower special education spending.

Osmond said he knows there's been opposition to state-funded preschool in the past, namely arguments that children shouldn't be taken out of their homes too early and that state programs shouldn't take the place of parents.

But he said he believes his proposal addresses those concerns. The preschool programs would be voluntary, parents would have to regularly volunteer in their children's classrooms, would have to pay a portion of fees, and the time children spent in class would be limited to 16 hours a week for 4-year-olds and 12 hours a week for 3-year-olds. Class sizes would be capped at 20 students with one adult for every 10 kids. It would also include a home-based software option for those who want to keep their kids at home.

Still, the proposal is far from a done deal. Even if private investors agree to front the cash, it still could be tough to get lawmakers to agree to start setting aside even $1 million to $2 million a year to pay them back.

Senate budget Chairman Lyle Hillyard, R-Logan, said he supports the idea of early intervention, but he said the state and nation's economic future is still uncertain.

"The concern I have, quite frankly, is I don't know how we're going to do in ongoing revenue; the economy is so shaky," Hillyard said, noting that funding growth in public education alone could cost $100 million.

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